Have you ever looked at an old photograph from pre-1970 and noticed just how much thinner people were back then? It is important to realize that the the USA and the world are seeing a huge increase in obesity and chronic disease. If you are overweight or have Type 2 Diabetes right now, you have a substantially higher risk of eventually getting Alzheimer’s Disease.
It is important to understand that Health-related costs are the number one reason for bankruptcy in the United States. This means that you could lose your life saving paying for unexpected medical bills or a lengthy stay in a senior home.
While dedicated Long Term Care insurance is available, I am a much greater fan of newer Hybrid Life Insurance policies and Life Insurance policies with Accelerated Living Benefits. Both of these types of policies combine the Death Benefit you expect with LIVING BENEFITS that you can use while you are still alive. These policies are game changers.
Don’t get sick in the first place!
Hybrid Life/Long Term Care
I should emphasize that a Hybrid Life Insurance/Long Term Care policy is just like it sounds. Meaning, it is a policy that combines Long Term Care and Permanent Life Insurance. The policy will pay a benefit if you become sick and require LTC or when you die. What is really important to keep in mind is that most of these policies will offer some multiple of the Death Benefit for long term care benefits. This means that with proper planning, you can remove the risk of exhausting your savings to pay for care.
You should be aware that your “old” policy can be exchanged tax-free for a “new” policy that provides much more value. Again, the Long Term Care benefit is usually a multiple of the Death Benefit.
Hybrid Life/Long Term Care policies are a Can’t Lose proposition. There is no downside…
- If you need Long Term Care, you will utilize the benefits of the policy, or
- If you never need Long Term Care, the Death Benefit passes to your heirs, or
- You can access the cash value in an emergency
Accelerated Living Benefits Riders
It is important to understand that Accelerated Living Benefits are policy riders that allow for a portion of the Death Benefit to be paid out in the event the Insured suffers specifically named conditions as described in more detail below:
Critical Illness Rider
A critical illness rider is triggered when the insured suffers a specifically named disease or condition. Some examples of what may be covered include:
- Cancer
- Blindness
- Heart attack
- Cystic Fibrosis
- End Stage Renal Failure
- Major Organ Transplant
- Stroke
- ALS (Lou Gehrig’s Disease)
- Aorta Graft Surgery
- Aplastic Anemia
- Heart Valve Replacement
- Motor Neuron Disease
If you are interested in receiving a quote for a policy with Accelerated Living Benefits, Click Here to request a quote.
Chronic Illness Rider
A Chronic Illness Rider is triggered when a doctor certifies that the insured cannot perform two out of the six “Activities of Daily Living”. This is the same trigger as for most dedicated Long Term Care policies. Activities of Daily Living include:
- Bathing
- Continence
- Dressing
- Eating
- Toileting
- Transferring
Terminal Illness Rider
A Terminal Illness Rider is triggered when the insured is diagnosed with a terminal illness that will result in death within 24 months.
Long Term Care as Part of a Solid Financial Plan
You should be aware that long term care planning is a significant gap in most retirement plans. This means that whether you solve your LTC needs with a dedicated LTC policy or with one of the Life Insurance solutions mentioned above, you NEED to plan for it. Don’t put your retirement savings at risk by not properly planning for a chronic illness.
[Read More: Self Funding Long Term Care]
It is important to understand that the average person will never likely never accumulate sufficient savings to be able to self-insure against catastrophic healthcare risks. That is why we buy health insurance… as a backstop on expenses.
[Read more: Healthcare costs cause 75% Bankruptcies]
Read more: Understanding Medicare and Long Term Care
You should know that the 2019 Genworth Cost of Care Survey found that the National Average monthly cost of an Assisted Care Living Facility is $4,051 in 2019. That cost is expected to rise to $7,317 by 2039. The same study found that the National Average cost of a private room in a Nursing Home was $8,517 per month. That cost is expected to be $15,383 per month by 2019.
Cost of Care Calculator: Find the cost of care in your area.
Don’t bet with your life savings!
You need to ask yourself this: Can your retirement savings support the income your needs in retirement AND the additional costs that you may incure if you or your spouse require an assisted living facility?
A Hybrid Life Insurance/LTC policy can significantly leverage your existing savings.
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No Rendering of Advice: The financial content in this document is provided for your personal education. It is not intended for trading purposes, and cannot substitute for professional financial advice. Always seek the advice of a competent financial advisor with any questions you may have regarding a financial matter. Information in this document is not appropriate for the purposes of making a decision to carry out a transaction or trade nor does it provide any form of advice (investment, tax, or legal) amounting to investment advice, or make any recommendations regarding particular financial instruments, investments, or products.
The sole purpose of life insurance is for the death benefit protection. Any other benefit is ancillary.